🥛 ‘This bull run is only 8.5% done’ 🐂

GM. This is Milk Road, the daily newsletter that tells you what moved in crypto, why it moved and what it means for you.

Here’s what we’ve got for you today:

✍️ Inflation's hot, but BTC holders aren’t selling.
🎙️ The Milk Road Show: Bitcoin Is Being Tested… But These Altcoins Could Outperform.
🍪 Morgan Stanley bets on tokenization.

Today’s issue is brought to you by GMGN, an app for trading crypto onchain across six blockchains. Its free 10-day trading championship starts October 16, and the winner gets a custom Aston Martin. Sign up here →

Prices as of 2:00 p.m. ET. Powered by CoinGecko.

INFLATION’S HOT, BUT BTC HOLDERS AREN'T SELLING 🔥

On Monday, John (our crypto analyst) laid out two ways this week's inflation report could go.

Core CPI rising 0.2% for the month was the good outcome. 0.3% or higher was "the scenario to fear."

(CPI tracks how fast prices are rising. Core strips out food and energy, and it's the version the Fed watches.)

Yesterday morning, we got the scary one. 😬

September vs. forecasts:

Headline inflation hit 3.7% for the year (3.6% expected).
Core hit 2.6% for the year (2.5% expected).
And core rose 0.3% for the month, right on John's danger mark.

Source: U.S. Bureau of Labor Statistics

The Fed already raised interest rates in September (its first hike since 2023), and markets had mostly written off another one at the Oct 27-28 meeting.

Before the report, traders put the odds of an October hike at ~1 in 4. Afterward, CME FedWatch (a tool that turns futures prices into rate odds) had them at ~49%... basically a coin flip.

On top of that, this morning's PPI (wholesale inflation) came in at 6.3% vs. 5.4% expected (headline), and 5% vs. 4.5% expected (core).

Higher rates also make dollars more attractive to hold, and M0xt (one of our PRO analysts) pointed out the dollar index (the dollar vs. a basket of big currencies) just hit an 18-month high.

That tends to pull money out of riskier assets, and sure enough, BTC dropped within minutes of the report, to ~$82.8K.

It had already been a jumpy week. On Monday night, BTC flash-dipped after Korea's stock market (the KOSPI) fell ~5.5% in a memory-chip selloff. John thinks traders who'd borrowed against stocks and crypto in the same account got liquidated on both at once.

So we've got: hotter inflation, a stronger dollar, and a Fed that might hike again in two weeks.

Yet one onchain analyst reckons this bull market is only 8.5% done…

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INFLATION’S HOT, BUT BTC HOLDERS AREN'T SELLING (P2) 🔥

Matt Crosby (director of research at Look Into Bitcoin) publicly called the bear market low, and on our show Monday, he brought a new data point, focused on long-term holders.

In each of the last three bull markets, those holders ended up selling ~37-38% of their supply, landing within a percentage point every time.

This cycle, they've sold just 3.16%. 👇

Source: Look Into Bitcoin

Divide one by the other, and you get ~8.5% of the way through.

And these long-term holders have held through some ugly news:

The Coldcard hardware wallet hack that drained ~$116M of BTC, the CLARITY Act (crypto's big market structure bill) getting rejected, and miners selling BTC to pivot into AI.

Price kept climbing anyway.

Crosby calls it textbook seller exhaustion, with the rally fueled by buyers rotating cash out of stocks, bonds and commodities rather than leveraged bets.

BTC probably won't rip straight up from here though, according to Matt.

After a ~50% run off the lows, he expects a cool-off (the last bull market had three stretches where BTC went nowhere for six months) - and his key support level sits right beside John's.

He’s watching Bitcoin’s 200-day moving average and the average buy price of short-term holders for support, which both sit around $75K.

Here’re John's levels for the range:

~$81K is where buyers have been stepping in hard.
$75.5K is the bottom of the range. If that breaks, John says the bears may have won.
A move above $87K sets up a run at $90K.

In summary: the macro picture says “wait,” right now - with the next big test being the Fed's Oct 28 rate decision.

P.S. John posts his levels and entries to PRO members in real time. Try Milk Road PRO for a buck for 7 days here.

NEW BULL MARKET OR BEAR RALLY?

Bitcoin is up more than 40% from its July low, but oil is over $100 and inflation just ran hot.

Kyle Reidhead, our Head of Research, and Martin Toman, our Lead Analyst, joined John to settle whether this is a new bull market or a bear market rally.

Here's what we covered:

Why Kyle went full DeFi, and whether burns and buybacks finally fix token value capture.
What Martin's indexes say while Bitcoin ETFs log a week of outflows.
Who wins the tokenized stock fight: Uniswap on Robinhood's chain or Aerodrome on Coinbase.

👉 Watch the full episode now.